Whether or not works have achieved “completion” or “practical completion” under a construction contract is often disputed. The date of achievement of construction completion has significant consequences. It usually marks the point where the employer is supposed to be able to take over the works and the beginning of the defects liability period. Failure to complete by the target date may also give rise to liquidated damages payable by the contractor to the employer.

Construction contracts, not unusually, will often spell out what constitutes “completion” or “practical completion”. However, some do not, and courts have had to determine its meaning in disputes on whether it has taken place. This article takes a look at how Malaysian and English courts have addressed this issue.

English position

Previously, the English courts had two approaches in deciding on the meaning of “completion”:

• one approach emphasised the “intended purpose of the works”. This means that completion is achieved despite the presence of minor outstanding works and defects which will not substantially affect the use of works for their intended purpose (see Hosier[1]);

• an alternative, and also stricter, approach construes “completion” to mean all construction work to have been undertaken except for defects which are de minimis or no more than trifling (see J Jarvis & Sons[2] and H W Neville (Sunblest)[3]).There are also some cases that chose a position in between the approaches mentioned (see Emson Eastern[4]).However, much clarity was given in the case of Mears.[5] The Court of Appeal confined the English common law position to the stricter approach and the central question discussed was whether a defect was de minimis or trifling. Such defect would not prevent practical completion. 

  The court went on further and provided helpful guidance as to what generally constitutes “completion” as follows:

   

  1. Practical completion is easier to recognise than
  2. The existence of a latent defect cannot prevent practical
  3. There is no difference between an item that has yet to be completed and one that has been completed but is
  4. The existence of patent defects will be sufficient to prevent practical completion, save where they are de minimis or trifling in nature.
  5. The ability to use the works as intended may be a factor in considering whether a patent defect is trifling in nature. However, such an ability does not mean that the works must be regarded as practically complete.
  6. The mere fact that a defect is irremediable does not mean the works are not practically complete. The question remains whether the defect is trifling in nature.

   

  Malaysian position

   

  In the Court of Appeal case of Kerajaan Malaysia,[6] the court referred to both approaches in English law and acknowledged that there are divergent views on the meaning of “completion”. Unfortunately, the court did not elaborate and decide on which approach is preferable. Similarly, the High Court case of Crest Worldwide[7] and the High Court case of Excel Metro[8] referred to all the English law approaches without making a stand. Although neither approach was specifically preferred, Excel Metro provided some guidance in the instance where a construction contract does not define the meaning of “completion”. The court held that in determining the meaning of “completion”: